Pheasant Corporation Ended Its First Year of Operations with Taxable

question 88

Multiple Choice

Pheasant Corporation ended its first year of operations with taxable income of $225,000. At the time of Pheasant's formation, it incurred $50,000 of organizational expenses. In calculating its taxable income for the year, Pheasant claimed an $8,000 deduction for the organizational expenses. What is Pheasant's current E & P?

• A) $175,000.
• B) $183,000.
• C) $225,000.
• D) $233,000.
• E) None of the above.

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Definitions:

Capital Balances

Reflects the amount of capital that each partner or shareholder has contributed to a partnership or corporation, or their ownership stake.

Partners' Capital Statement

A financial statement showing the changes in each partner's capital account of a partnership during a specific period.

Partnership Expenses

Costs incurred by a partnership in the course of its business activities, which are shared by the partners.

Additional Investments

Extra funds put into a business by its owners or shareholders, beyond the initial investment, to support operations, growth, or expansion.